COMMERCE 1AA3 Lecture Notes - Lecture 1: Accounts Receivable, Balance Sheet, Income Statement
15 Sep 2016
School
Department
Course
Professor
Commerce 1AA3 : Financial Accounting C03
Instructor : Emad Mohammad
September 7th 2016
Assets
1.measurable
2. has use in business
Liability
1. Future economic sacrifice
2. Measuring
3. Enforceable by law
4. Resulting from a past transaction
Liabilities are not explicitly stated
GAAP is for private companies (you cannot buy their stock publicly)
Four Financial Statements
1. Income Statement (Measures the financial performance)
2. Statement of Retained Earnings (Pool of net incomes and losses)
3.Balance Sheet (Measures the health of the company)
4. Statement of Cash Flow (Measures company’s liquidity - ability to pay short term liabilities)
Can you have a negative retained earning?
- Yes
Can you have income, but no cash?
- Yes, due to accounts receivable
Question Financial Statement Answer
How well did the company
perform during the year?
Income Statement Revenues - Expenses = Net
income or net loss
Why did the company’s
retained earnings change
during the year?
Statement of retained
Earnings
Beginning retained earnings
+ net income/- Net Loss -
dividends = Ending reatined
earnings
What is the company’s
financial position at year-
end?
Balance Sheet Assets = Liabilities + Owner’s
Equity
How much cash did the
company generate and
spend during the year?
Statement of Cash Flows Operating Cash Flows
+/- Investing cash flows
+/- Financing cash flows
= Increase/decrease in cash
Balance sheet from this year,
find more resources at oneclass.com
find more resources at oneclass.com
